Member Banks of Azerbaijan Banks Association are working continuously and consistently to finance the real sector, which is the main driver of our country’s economic development, as well as to expand the securities market.
Thus, in order to finance the SOCAR Polymer project of SOCAR Polymer Investments, “International Bank of Azerbaijan”, “Bank of Baku”, “Xalq” Bank, “Kapital Bank”, “Bank Respublika”, “RabitaBank”, “PASHA Bank” and “Ziraat Bank” have invested $ 200 million in bonds issued in July 2020. The tenor of these bonds is 5 (five) years, and the annual interest rate on the bonds is 5% (five percent). The bonds’ issuance registered by Central Bank on June 19, 2020 and bonds are fully placed on the OTC (over-the-counter) market.
Totally, more than $ 864 million has been invested in the project. It is the first project in Azerbaijan’s non-oil sector to be financed under the internationally accepted “Project finance” principles. About 60% (US $489 mln) of the total investment costs covered through a non-recourse loan received from Gazprombank. As part of the next phase of SOCAR Polymer’s financing strategy, refinancing part of the current loan through a lower-interest loan has been started.
The funds allocated by the banks were used to refinance part of the loan received from Gazprombank JSC in order to optimize the financial portfolio of SOCAR Polymer. This will allow SOCAR Polymer to reduce project costs through more cost-effective financial resources.
It should be noted that SOCAR Polymer is the first large-scale project implemented in the petrochemical industry of the country in the last 40 years. The project, which aims to accelerate the development of the Azerbaijani chemical industry, was launched in 2013. The production facilities of the company consist of two plants producing polypropylene and high density polyethylene in Sumgayit Chemical Industry Park. The plants were commissioned in 2018 and 2019 respectively. The successful results of this project are expected to create a multiplier effect in many important sectors of Azerbaijani industry and to create many new jobs. It is known that one of the important forms of financing of public and private companies operating in the real sector is to invest in securities issued by them. As a result of the Central Bank’s promotion of real sector financing through the capital market and reforms in the capital market, the pace of financing through the capital market is expected to increase in the near future.
The member banks of the Association of Banks of Azerbaijan will continue to actively finance companies operating in the country, as well as promising projects that will contribute to economic growth and job creation.